Thursday, July 20, 2006

EXCLUSIVE: LibDem Donor Company To Be Struck Off Companies Register

This morning I received an email tip-off about the status of 5th Avenue Partners, the company run by Michael Brown which donated £2.4 million to the LibDems last year. I have now checked it out with Companies House and I can reveal that the company is being struck off the Companies House register of UK companies.

More damagingly, Companies House is alleging that the company has never traded in the UK and they are in correspondence with the Inland Revenue on the matter. A letter was sent by the Registrar of Companies to the Inland Revenue on 17 July asking for a prompt reply. They are inquiring if the Inland Revenue has ever had any dealings with 5th Avenue Partners.

If the allegation that the company has never traded is proved to be true, the LibDems will be in serious trouble for having accepted a donation from a company which has no UK base.

Michael Brown has two UK companies, 5th Avenue Partners Limited (Co Reg 05073942) and 5th Avenue Partners (UK) Limited (co Reg 05360551). The first company was incorporated in the UK on 15 March 2004. It has never filed any accounts (due by October 2005) and it's Annual Return is three months overdue (due on 12 April 2006). All this information can be found on the Companies House website HERE. Companies House have written them the statutory three default letters and not received a reply. Within the next few weeks, once they have heard back from the Inland Revenue, the Registrar will petition for the company to be struck off by means of an advert in the London Gazette.

The second company was formed in February 2005. No accounts are overdue but their Annual Return should have been made by 10 March 2006 and is therefore 4 months overdue. Similarly, three default letters have been sent and have received no reply. An advert will shortly appear in the London Gazette petitioning for them to be struck off.

According to Companies House, although shareholders can make an application to do so, in this case it is the Registrar who is proposing to strike the Companies from the Register. The proposal will appear in the London Gazette and will be acted on if nobody objects within 3 months. The Registrar is entitled to do so if he determines that the company is not in business. What is unusual about thes companies is that they were only formed in 2004 and 2005, which is a remarkably short period of time for the Registrar to decide that they are not in business.

The reason he is contacting the Inland Revenue is to determine if the company has EVER been in business. The inference is that the Registrar has decided that the companies were probably never in business, and if so, under Electoral Commission rules, the company was never eligible to make a donation to the Lib Dems.

As some readers will know, I have written about this before. here's a quick reminder...

drew, for some reason the links to the relevan pages take you somewhere else. I have therefore replaced them with the main companies house site, where you can search for the companies by their name or registration numbers, which I have now added into the text.

Yes - but the Tories and Labour have people willing to lend them that amount of money without too many questions asked (and the Tories have 32 Smith Sq and 57 Tufton Street to secure commercial loans against). Do the Lib Dems have someone willing to lend them £2 million without any security?

Who registered HEXAGON 303 LIMITED the previous name for 5th Avenue Partners ? This is a shelf company so who is it that operates at TEN DOMINION STREETLONDON, EC2M 2EE................looks like Fox Williams corporate lawyers..............do they service Mr Brown ?

Again, I have had to disallow various comments from anonymous posters who are making wild allegations both against the LibDems and the Conservatives. If you have something worthwhile to say then at least have the politeness to put your name to it. If you don't I will more than likely not allow it through.

Hi IanBy all accounts Prescott had a good day yesterday. He must have had, you haven't mentioned it! He seems to have made Tory James Duddridge look a total fool. Is Prescott's allegation that Duddridge's constituency party took money from a rival casino firm true: whoops sorry forgot you only do Labour sleaze.

May I be allowed a feeling of shadenfreude at seeing the Lib Dems in such straits? While one should be sympathetic to human frailties, the Lib Dems smug, holier-than-thou demeanour makes me feel that they have it coming. Lib Dems bankrupted? Whoo cares.

It's always terribly sad to see the LibDems in any difficulties. They are such nice people.

However: let's not laugh too hard too soon. In the ongoing shambles that has been the Tory party since 1990, corners may well be shown to have been cut. We've had to return donations to some right old chancers ourselves over the years - Asil Nadir ring any bells?

In addition, with all 3 parties owing huge sums with small prospect of swift replenishment, the political constellations are set fair for an assault on the taxpayer and democracy in the shape of state funding of the main parties.

That would be a disaster. It is the fault of all the parties that their former mass membership has become so alienated that they can no longer be relied upon to pony up much of the necessary.

At this rate it'll be us poor taxpayers who have to resort to making our own sandals!

Iain,There's a key issue about the interpretation of the law here. It would seem the Lib Dems were able to accept the donation - at the time of receipt, it seems 5th Avenue would be considered a permissible donor.

I don't know whether this aspect of the PPERA has ever been tested in law, but it seems to me (as a non-legal expert) that a company which is"(i) registered under the Companies Act 1985 or the Companies (Northern Ireland) Order 1986, and (ii) incorporated within the United Kingdom or another member State," is deemed to be carrying on business in the UK under the terms of the PPERA legislation. In other words, the two clauses were inserted to define "doing business in the UK". I'm not sure the "doing business" statement was meant as a qualification to the two clauses (which is the relevance of the testing in law). If my reading is correct, the presence of 5th Avenue on the Companies House register as a live company at the time the donation was received should be sufficient to keep the Lib Dems out of the mire.

I don't see how any action now to strike a company off a company can be made retrospective, and thus make the donation illegal.

Anon - You can't register a company at Companies House as live or dormant. At the time of incorporation a company has by definition not started operating and is dormant. Dormancy should be declared to the taxman (otherwise you get fines for not submitting a tax return) and when annual accounts are submitted - you can use an abbreviated template for dormant companies.

In this case if a company donates £2m the company is by definition not dormant and should have submitted accounts/ company returns and tax returns.

They may get away with this, but it appears doubtful that the Libs will be able to prove that they were diligent enough in determining the legality of the loan.

And for those that think that the Tories are in trouble, the flow of donations (running at about £7m a quarter) and where we are in the electoral cycle suggests otherwise. Simple maths.

1 It is worth noting that the Electoral Commission did check out this donation and concluded that the Lib Dems had acted reasonably.

2 I doubt any of the parties routinely ask donors whether they expect to be visited by Mr Plod in the near future, it's hardly likely to be an effective way of encouraging your supporters to donate.

3 Even if they did end up having to pay back some or all of this money they would still be in far less debt, even allowing for their lower turnover, than the other parties.

4 A party that raised upwards of eight million last year can probably find a few wealthy supporters willing to make loans to cover it if necessary. Unlike the other parties the Lib Dems have several years experience of agreeing loans and reporting the interest;-)

The Electoral Commission have merely suspended their investigation pending the completion of the police investigation. It isn't over. Their initial response was that it was permissible, but they reopened the investigation earlier this year.

And to the other comment - the PPERA 2000 is quite clear. A company has to be properly registered AND be carrying on business. That's to prevent 'front' companies being established to funnel cash to parties.

If the LDs have to resort to such a technical argument in the defence of their cash, then they are in REALLY deep trouble.